UK Rental Property Interest Fades Due To Lending Constraints

Landlord interest in rental investments is starting to fall, due more to lending constraints than higher capital gains taxes. On a positive note for landlords, though, late rental …

Landlord interest in rental investments is starting to fall, due more to lending constraints than higher capital gains taxes. On a positive note for landlords, though, late rental payments are also on the decline. See the following article from Property Wire for more on this.

Fewer private residential real estate landlords in the UK have had tenants in rent arrears over the last three months and outstanding amounts are falling significantly, according to new research.

In the second quarter of 2010 just over 21% of landlords experienced rental arrears, down from the 24.5% previously reported, the report from the National Landlords Association (NLA) shows.

It points out that the fact that the average amount of outstanding rent arrears has dropped significantly from £978 in the first three months of the year to £799 in the second quarter could indicate that financial pressures on tenants have started to ease as the fragile economic recovery continues.

‘Rent arrears are a serious problem for landlords all over the UK. It is good to see the latest data which represents a small improvement in that more tenants are keeping up with their rent payments and not putting pressure on their landlords who may well have mortgage repayments to consider. It is critical that tenants and landlords communicate and work together to tackle financial problems before they result in a loss of rent or even the tenancy,’ said David Salusbury, chairman of the NLA.

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The NLA has a new service for landlords facing problems, he added. NLA Rent Arrears is an online facility whereby landlords are able to instruct its Rent Recovery Team to collect outstanding rental amounts from tenants.

Acting on a landlord’s behalf, NLA Rent Arrears will contact tenant(s) by telephone or letter, visit them at the rental property, serve notices (where appropriate) and undertake possession proceedings.

Separate research shows that landlords in the UK are increasingly uncertain about the buy to let real estate market. Although the majority of landlords, some 64% are still positive about the future of the property buy to let market, this has fallen from 81%, according to the survey by specialist lender CHL Mortgages.

The survey, which provides a snapshot of landlord’s views on the buy to let market and includes questions on a variety of sector issues including plans for the future, buying constraints, impact of changes in Capital Gains Tax (CGT), tenant demand and rental income, also shows that the number of those who are unsure about the future rose from 9% to 25%.

This greater uncertainty about the future has translated into landlords’ short term purchase intentions with 28% of respondents looking to purchase more investment properties, a drop of 10% from the last survey. More landlords are now looking to sit tight with the properties they hold, with 66% saying that is what they will do compared with 53% six months ago.

They survey also reveals that the lending squeeze continues to make itself felt, even with the addition of a number of new buy to- let lenders over the past six months.  Some 46% of respondents cited a lack of finance for both new purchases and remortgaging as a reason for not buying more properties. And 30% said that the increased deposit requirements now necessary to obtain a buy to let mortgage were also impeding their purchase ambitions.

The 10% increase in Capital Gains Tax for higher rate tax payers, announced in June’s Emergency Budget, appears to have had little impact on landlords with only 19% suggesting that the move has changed their view of buy to let as an investment.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.


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